Today, we are diving into oligopoly. Can anyone tell me what they think defines an oligopoly?

Exactly! In an oligopoly, there are few large sellers who dominate the market. This can create an interesting dynamic, right?

Great observation! Yes, they can influence prices together, but they are also interdependent, meaning one firm's price change can affect the others.

Interdependence means that each firm's decisions—like price changes—impact the others because they share the market.

Of course! Think of mobile service providers like Verizon and AT&T, or automobile companies like Ford and Toyota. They dominate their respective markets!

So, to recap, oligopolies involve few large sellers, mutual interdependence, and often involve both homogenous and differentiated products.

Let’s delve deeper into pricing strategies. Who can explain what price rigidity means in an oligopoly?

Precisely! Price rigidity refers to the tendency of prices to remain stable even when market conditions change. This is because firms often avoid price wars to maintain market stability.

Good question! Instead of lowering prices, firms may engage in **non-price competition**, like improving product quality or advertising to attract customers.

Exactly, that's a core strategy in oligopolies! Now, let’s summarize: we learned that oligopolistic prices tend to be rigid, and companies opt for non-price competition.

Let's now discuss the types of products you can find in oligopolies. Who knows if they are homogeneous or differentiated?

That's correct! Oligopoly can feature homogeneous products, like steel, or differentiated products, like cars. This variety allows firms to use different marketing strategies.

Good point! Homogeneous products are similar in nature and function, while differentiated products have distinct features that make them unique. Can anyone give me examples from our daily lives?

Yes! So, to summarize, oligopolies can have both types of products, influencing how they compete and market themselves.